Bears score again in $PSTG

Option traders are posting large gains on downside positions in Pure Storage (PSTG) today for the second time in barely a week.

On Nov. 6, Market Rebellion’s Unusual Activity Service flagged the purchase of 4,400 December $20 puts for $2.25 to $2.35 with shares at $18.40. This was clearly fresh buying, as open interest in the strike was a mere 42 contracts before that session began.

Those puts have traded for as much as $4.20 so far today, almost twice their initial purchase price. The stock fell 14.18% in the same time period, underscoring how options can far outperform moves in their underlying shares on a relative basis.

It is the second winning bearish trade in the name posted on Market Rebellion since Nov. 22.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

PSTG is down 1.71% to $15.80 this morning. The data-storage company’s revenues missed estimates after the market closed on Nov. 21.